Wealth Headhunters Turn More Cheerful, Say Asia Will Lead Job Market

Tom Burroughes Editor London 21 January 2010

Wealth Headhunters Turn More Cheerful, Say Asia Will Lead Job Market

After the rough past two years, headhunters in the wealth management industry say their sector is feeling more upbeat, confident that financial hotspots in regions such as Asia will drive business growth.

To coin a political phrase from late-1990s UK politics, things can only get better. After a year in which much of the financial industry spent its time picking through the rubble to start rebuilding business after the credit crisis, headhunters in the wealth management field are turning cautiously optimistic.

Unsurprisingly, executive search companies have reported a decline in 2009 in overall placements of staff at banks and other wealth management institutions, although their workload of interviews has been busy as thousands of unemployed investment bankers have tried to enter the market, firms say.

Firms predict that Asia will remain one of the brightest hopes for strong recruitment this year, and already, a number of eye-catching big moves have highlighted how Singapore, Hong Kong, India and mainland China are some of the places to watch. Latin America also figures as a region to focus on, while Switzerland is expected to be busy. In the Swiss case, even though the Alpine state has been hit by the global crackdown on offshore banking, the country is seeing an influx of investors and bankers from the UK, which is due to get a new, higher-rate income tax from April, hitting top-earners. In the Middle East, meanwhile, the region has gone a bit quiet, most recently hit by the debt worries about Dubai. But longer term, prospects may be brighter.

Recruiters also notice that in the harsher employment climate, private bankers are being asked to serve out their full notice periods – which are getting longer – rather than leave their jobs quickly to work for a rival. This is unlikely to change soon. And banks are getting tougher on the issue of “phantom books” of business – the issue of where a banker might exaggerate his or her client list in order to secure a job.

To shed some light on how active recruitment has been in wealth management in the past 12 months, jobs advertised on WealthCareers, which is a sister business to WealthBriefing, averaged at around 120 at the start of 2009, and has risen to around 350 by the year-end.

WealthBriefing has spoken to a swathe of recruiters in the European market to ask for their views on the year ahead. Here are a selection of their views:

Ryan Packer, consultant, investment management and private banking,  

JWS Resources. The firm’s core areas are the independent financial advisor, employee benefits and investment management sectors.

“I think more and more clients are planning already for 2010 and so I think there will be an improvement, how drastic I do not know, but am confident that things will improve – I fail to see how conditions would be worse than what we have witnessed over the last 12 months.”

“We will still see the demand for good new business people, but I feel clients will look to expand other areas as things pick up. Clients are already making the right noises i.e. good flows of new business, which means at some point they will need to hire the man power to be able to deal with this,” he said.

“I think it is fair to say across all of our core sectors we have found it extremely tough, but are still here unlike some of our competitors so see that as an accomplishment in itself,” Mr Packer continued.

“There have been months where we have seen a spurt in fees but the consistency is simply not there. I think it has been difficult to have the level of control over the recruitment process as we did in the past; it has been a buyers market, so negotiation on fees has been more common, which I believe is due to the more generalist agency offering their services for far lower fees leaving the more niche recruiter with the dilemma of lowering fees or walking away from business,” he said.

“I think the biggest challenge as a recruitment consultant is that rather than 18 months ago where there were more jobs than candidates, at present there is a complete reversal whereby the roles are difficult to come by but candidates seeking alternative employment are in their numbers,” Mr Packer added.

Dudley Edmunds, of Culliford Edmunds, based in London.

“The Far East will continue to develop and wealth managers will continue to look further afield than Hong Kong and China. India will continue to be of interest. Central and Eastern Europe will continue to grow but mainly with wealth managers that are equipped to deal with these areas.”

He said the Middle East “will be quite interesting as Dubai will continue to go south”, referring to the recent debt problems of the Gulf city state.

“There is rumoured to be considerable growth in small single and multi-family offices here in the UK. HSBC will continue to grow and will be well worth watching in the Middle East. Standard Chartered will also continue to grow both in size and reputation of the private bank. UBS should come back leaner and meaner and remain the number one global wealth manager.”

“Wealth managers are still looking for people with 'a book' although the more enlightened are recognising that the total percentage transfer may be less than desired and may take longer. Some of the larger wealth managers and some of the more innovative smaller firms will be taking on more product/asset class specialists to bolster the investment side of the business.”

“There will always be displaced or disillusioned investment bankers looking to make the move [into wealth management]. Some will do it very successfully and stay in their new business; some will not be successful but hang on; some will go back to where the big total compensation is as soon as they get the chance,” he said.

Chris Field, associate partner, international search at Hanover Search and Selection

"Truth be told it [2009] has been a tough year, a real survival of the fittest. Within the private banking executive search arena, we have seen a number of competitors either go out of business or get bought out by larger firms. The bright side being that if you are still around in 2010 then you obviously have the relationships and people to capitalise on when the markets pick up.”

“[In 2009] we have seen banker’s mindsets shift away from the comfort of Tier 1 private banks to the smaller, more aggressive boutiques and independent asset managers. Those boutiques with custodial agreements in place are best placed to take private bankers or teams, without the fuss of moving clients or unwrapping products. Many of them also offer an easier working environment and most importantly, formulaic, uncapped bonuses.”

“We expect to see the European banks look to replace lost headcount (stolen and axed) with a particular appetite for private client teams possessing long-standing client relationships, making it easier to transfer assets and giving the client an increased sense of familiarity.”

“The institutions focusing on Islamic assets have seen substantial growth. The Shariah wealth management market is worth a reported $1 trillion, with a number of Arab and Asian ultra high net worth individuals favouring the holistic and ethical approach of Islamic banks over the aggressive style of their European and American counterparts.”

“In the UK, we have recruited heavily for the Shariah-focused houses that have emerged to offer institutional and private client services to Islamic and non-Islamic investors alike, a trend we expect to see continue in the years to come."

Adam Buck, managing director at Selby Jennings. It covers the whole spectrum of financial services, including wealth management.

“We are noting that a lot of the smaller boutique people are winning business from the bigger players. We are seeing a lot of people hiring in Asia at the moment.”

“There’s a lot of movement in Switzerland…people are looking to go out there.”

On the issue of relationship managers trying to get jobs by lying about their books of clients, Mr Buck said he would not expect a would-be RM candidate to show his or her book of business at the first interview, but said solid due diligence checks on a candidate, and strong work references, were good filters. He also pointed out that increasingly, banks are looking at the robust processes and disciplines that a candidate might bring to a client bank.

“It is a very difficult issue – you have got to believe the person can bring that person across.”

On pay, Mr Buck said notice periods are getting longer, with more instances of three and six-month periods. Also, bankers are increasingly being asked to serve out those notice periods rather than disappear sooner.

There have been examples of work contracts stipulating that a person cannot work in the same country for a future employer as at his or her existing one, although such contracts are arguably impossible to enforce on legal grounds.

Tim Gibson-Tulberg, who runs an executive search business with offices in the UK and Switzerland.

“The market for 2010 looks strong with certain regional hotspots developing globally.  The last two years have seen major defections from the experienced segment of the human capital pyramid in wealth management as a whole. These defections have been spurred on by the banking crisis with skilled bankers often departing to set up independent operations.”

“Equally, big banks have been reluctant to sign experienced hires on substantial risk premium packages in uncertain times. The net result, coupled with early-stage junior rank layoffs in 2008/9, is a severe need for human capital in the core banking segment of the wealth management space as a whole,” he continued.   

“2010 will see selective volume hiring both by brands and by geography. Growth is required and simply farming a set number of assets is not in anyone’s strategic nor operational interest,” Mr Tulberg said.

“Switzerland is taking in new hires from the UK in particular as a reaction to client interest following fiscal change. Equally, Singapore and the Far East are looking to increase headcount. The only market that looks oddly quiet in comparison to previous years is the ME,” he said.

“We see retail clients seeking to attract the ultra high net worth client, broker models seeking to become more mainstream wealth managers and major reorganisation in most big label private banks.  The holistic result is probably the largest sea change in wealth management manning for at least a decade.  This is exacerbated by the change to remuneration models with the industry polarised between the high base/ low bonus model and the base and uncapped bonus models,” he added.

Sophie De Ferranti, head of the newly formed wealth management division of Execuzen, the recruiter.

“South and North East Asia in particular remains poorly serviced by the headhunting industry. Only several experienced recruiters have succeeded in weathering the recent industry displacement of talent and have held on to their established satellite offices within Asia and Switzerland,” she said.

“The smarter headhunters will seek to build water-tight partnerships with a diversified portfolio of clients, including both from multi family offices to Tier 1 private banks, thus balancing out the scales of risk,” she said.

“Conversations with senior wealth managers across the globe, and indeed those decision makers tasked with sourcing talent, would suggest that private banks are looking much more fondly towards lateral and team hiring strategies, as opposed to a blinkered focus on traditional profiles,” she said.

“Banks seem much more willing to commission specialist research projects to help them better understand the competition and, more importantly, guard against losing their superstars, and hence clients,” Ms De Ferranti added.

Andy Taylor, director - Exchange Street Financial Services.

“What we do know is that the economic picture is improving and we have seen a definite upturn in the number of positions arising on the technical teams that support financial advisors as well as better news for regulated advisors. Markets are cyclical and that would suggest a better 2010, although the pace of recovery has caused better economists than I trouble with their predictions,” he said.  

“A huge challenge has been educating financial services professionals about what the market, and by extension their employer, wants from them in the future. An ability to form strong relationships with clients and provide an excellent level of service will always be a key component of advice, but this has to be backed up by an ability to generate new clients,” he said.

“IFA/financial advisor firms are commercial ventures and, like their counterparts in the solicitor and accountancy arenas, fee earners have an increased duty to develop new business whilst retaining service levels. Those individuals that can demonstrate this are the ones who have found the job market more open than those that can’t and this will hold true for years to come,” he said.

Nick Careless, AP Executive, which is part of AP Group.

“Based on what we have seen over the past couple of years, I think, though, that we have bottomed out. Recruiting is usually a pretty good indicator of what is happening outside, albeit with a time delay. We have seen some pickup recently, and the second half of 2009 has been better than the first half,” he said.

“Although the recruitment market has been slow in terms of consistent placements, AP has been very busy in terms of interviewing candidates and getting people ready for when the market will inevitably open back up. We are extremely busy in terms of our actual workload which has not let up, the focus of what we are spending time on has just shifted,” Mr Careless said.

“The general feeling is that 2009, at least financially, has been a write-off and that we remain cautiously optimistic about seeing some growth by the second quarter of 2010,” he continued.

“The ‘hot’ sector appears to be Asia and this is what people seem to be talking about. We have felt that over time Asia is the region to watch and where the opportunities may lie for the wealth management industry. There is a sense out there that this [Asia] is going to be where the growth and opportunity is. More and more people are saying they would like to be considered for positions in Asia Pac, especially in Singapore, over and above Hong Kong.”

“In terms of the Middle East, the scene of rampant hiring over the past few years, the shine has rubbed off Dubai and the region to a degree. Dubai has suffered from a lot of negative press and serious adverse developments such as the slump in property prices, upon which a lot of the economic boom was propped. Based on candidate interest, Dubai is not the most appealing jurisdiction right now, though this will no doubt change over time,” Mr Careless said.

“The Caribbean market has remained strong to a degree, though a number of issues including, for example recent budget revenue measures in Cayman increase the costs of doing business there as well as continued scrutiny by the US and the G20’s more aggressive stance toward offshore financial centres, may see hiring impacted as a consequence of the business going elsewhere,” he said.

“From the candidate side, some inflows into the Caribbean centres may be driven by people seeking to escape the recession in the UK as well as benefiting from the low tax environment and a favourable dollar exchange rate though we are still monitoring this carefully, as a number of the powerhouse firms have been making, and continue to make, lay-offs. There is somewhat of a ‘lag period’ where offshore locations experience the knock-on effect of the global economic downturn, coming out of major financial centres which feed them work. This lag, already felt in onshore jurisdictions more than a year ago, is now starting to impact these offshore jurisdictions,” Mr Careless said.

“Switzerland has, as we know, had some issues this year with some of its big brand banks taking flak, but with the HNW client zeitgeist moving away from the aggressive attitude and emphasis on bottom line of the US brokerage model, and an emphasis on quality of service, ethics and discretion all important, the Swiss private banking is on the up. Additionally, with adverse tax regimes in the UK penalising hedge fund businesses and high earners, including the high value non-dom market, Switzerland is one of the countries that will benefit with new business inflow,” he said.

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